Forced closure of universities, fierce private-sector competition for students and a loss of reputation overseas are all outlined in a major new study as possible future scenarios for UK higher education.
The report by Universities UK sets out three visions for the future size and shape of the sector in the light of challenges looming on the horizon.
Sir Muir Russell, chair of the report's steering group and principal of the University of Glasgow, said these were not predictions but rather scenarios that "describe in a stark form what could occur".
Rick Trainor, president of UUK, added that universities were up to the challenge of coping with changed circumstances and warned the Government that it was important for the sector to remain "lightly regulated and free to respond flexibly".
Looking forward to 20, the report assesses the impact of a downturn in the number of 18 to 20-year-olds in the UK, which will result in 70,000 fewer students, equal to a 5.9 per cent fall, in the next decade.
This decline will be followed by a small increase between 2019 and 20. At the same time, there will be an expansion among older age groups, from which part-time students are mainly drawn.
The report identifies three key issues driving demand for higher education: finance and funding, external factors and employer engagement.
Assessing the first of these, it says that increased competition for public funds, without additional funding from employers, will require students and graduates to contribute more.
While predicting that public money will continue to be available for purposes of widening participation and for subjects judged to be of national strategic importance, it warns that institutions will face "significant challenges" to secure their long-term futures.
On the impact of external factors, the study says the UK's position in the international market may be threatened as competition from other countries grows.
It adds that the number of private providers is likely to increase, and that student demand may drive the use of cutting-edge technology to deliver courses.
There is a chance that employer engagement in higher education will increase, the report says, but it warns that the Government's current drive to see employers co-funding degree courses for their employees carries financial risks for universities.
Presenting three scenarios for the future shape of the sector, Nigel Brown, one of the report's authors, said they were meant to overlap, with elements from all a possibility.
They include one typified by slow adaptation to change, another that is market-driven and highly competitive and a third dominated by employer-driven flexible learning (see boxes below).
In all three cases, the number of part-time students is expected to rise, driven by the demographic change and demand by employers for high-level skills.
In the last two scenarios, this shift to a greater proportion of part-timers would lead to a significant fall in full-time equivalent numbers, resulting in dangerous financial pressures.
The analysis also warns that the lucrative market for international students from outside the European Union is particularly vulnerable, which will be a cause of concern to many institutions.
In the case of the first scenario, that of slow adaptation to change, the report predicts a sector shaped largely as it is today, although some institutions may have merged.
There will also be a greater level of "transnational" provision with overseas universities, the report says.
In the case of scenario two, which is market driven and highly competitive, there will be a much greater variety of institutions, including more from the private sector.
This will mean fewer large broad-mission universities than there are now and more small and specialist institutions.
The third scenario, where the influence of employers and technology are dominant, is one in which the higher education sector is much more stratified than it is today.
A small number of elite institutions would exist, charging high fees and with strong research and large numbers of international students. In addition, there would be large regional centres of higher education along with some "virtual" institutions that would be offering courses entirely through technology.
Having mapped out these possible futures, the report concludes that institutions will have to anticipate developments less predictable than a simple demographic downturn.
The threat posed by private-sector competitors with degree-awarding powers, the need to identify new markets and developments in the international student market are all key.
Institutions must also stay abreast of technological advance and possibly link up with the private sector to successfully develop new ways of delivering its courses, the report says.
It adds that institutions may want to increase levels of collaboration more generally, including "academic partnerships ... or even merger to ensure the sustainability of teaching over the longer term".
| THE POPULATION CONUNDRUM | |||||
| Full-time undergraduates (000s) | |||||
| ? | 2005-06 | 2019-20 | 0% change 2005-06 to 2019-20 | 2026- | 0% change 2005-06 to 2026- |
| England | 976.8 | 930.1 | -4.8 | 1,004.7 | +2.7 |
| Wales | 64.8 | 59.3 | -8.5 | 61.6 | -4.9 |
| Scotland | 125.5 | 111.8 | -10.9 | 115.0 | -8.4 |
| Northern Ireland | 31.7 | .5 | -13.2 | .5 | -13.2 |
| Source: Universities UK | |||||
SCENARIO ONE: SLOW TURNING
Universities fail to identify significant new sources of students and are slow to adapt to the demographic decline, under the first of three scenarios outlined by Universities UK.
As public funding falls in line with student numbers and as fees remain static, universities may change their portfolios to attract a greater share of students, increasing competition.
Collaboration grows in some markets, but cost-cutting by institutions poses a risk to quality and may lead to restructuring and mergers.
In this scenario, opportunities are identified in the development of new programmes to capture new markets and an increase in demand for part-time and postgraduate study.
The UK's share of overseas students may also grow as institutions increase collaboration.
However, threats include the closure both of institutions and low-demand courses and potential falling entry standards as competition heats up.
Ultimately, this may result in a loss of reputation of the UK higher education system.
SCENARIO TWO: SHARP COMPETITION
New higher education providers drive a surge in competition as they target niche markets and offer low-cost courses, under the second UUK scenario.
This market-driven future is one of increased competition in all markets, in the UK and internationally, between established universities and newcomers.
Key features include investment in e-learning and demand for more flexible academic support from students.
The landscape would change dramatically, with fewer large institutions offering courses across all disciplines, and the advent of more small and specialist providers. Universities and employers would also compete more for well-qualified 18-year-olds.
These changes will ensure institutions focus on their strengths and identify ways to lower costs, as well as expanding demand for employer-supported postgraduate study.
But the reputation of the sector may be damaged as private providers gain degree-awarding powers and publicly funded places go unfilled. A small number of elite institutions may seek to withdraw from the publicly funded sector.
SCENARIO THREE: HIGH-TECH, HIGH-EMPLOYER INPUT
Most students are part time - working while studying - and enrolled on courses that are delivered via technology and co-funded by their employers, under the third scenario envisaged by UUK.
A serious squeeze on funding, increased regulation of how the state contribution is spent and the triumph of employer-led demand for part-time qualifications are the dominant trends.
The development of strategic alliances between institutions and employer groups may allow some universities to establish themselves as the major regional provider. The expanded use of "virtual" courses will open up access, particularly for older people.
There is a danger that private providers may corner the market for lucrative vocational courses, as well as taking over failing institutions.
An extreme stratification of the sector and mergers, including the merger of universities with further education colleges, are other risks that could contribute to a loss of reputation for UK higher education.